In an evolving and complex DeFi ecosystem, innovative solutions are needed to maintain accurate asset pricing while enhancing security. In response to these needs, Fringe Finance has introduced radical improvements to its price oracle model, with new features offering improved flexibility, enhanced protection against market manipulation attacks, and expanding asset inclusion, benefiting a wide range of users on the Fringe platform.
This article describes the benefits of Fringe’s new price oracle model. For a more in-depth description of how the new price oracle works, see the related article here.
Addressing user needs and enhancing protection
Fringe’s new price oracle model brings significant benefits to users, which include lenders, borrowers, and traders. A key feature of this model is improved resilience against market price manipulation attacks, ensuring reliable and accurate prices for user interactions. This means users can have greater confidence in their transactions, knowing they are dealing with a robust platform better equipped to protect them from such attacks. Fringe has developed these material improvements to best protect against various types of possible attacks (e.g. the Mango Markets price manipulation attack).
Furthermore, as explained in the article detailing the improved model (see above), additional protection is achieved by incorporating additional price sources and applying a series of operations on the reported prices to minimize attack risk.
In a notable advantage for borrowers, the new model also reduces price discontinuations into a smoother curve to ensure borrowers receive better prices for their liquidated collateral during any liquidation event. This results in better liquidation prices for their collateral, providing an added layer of protection in the event of a liquidation.
In the same way, lenders (in essence, liquidity providers), gain from interacting with a platform that offers better protection against market manipulation attacks and a more efficient borrower liquidation mechanism. This enhancement translates to safer lending practices, as lenders are assured that their assets on the platform are better protected.
Timely and accurate price updates
The new price oracle model incorporates interaction-activated price updates and bot-activated price updates. Interaction-activated price updates are activated whenever users interact with the lending platform by depositing collateral, taking out a loan, or repaying a loan. Bot-activated price updates occur when a price is older than a predetermined minimum age threshold, where an automated bot obtains a new reported price. This combination of interaction-activated price updates, as well as bot-activated price updates, best ensures price accuracy and timeliness in a cost-efficient way.
Securing the platform with price attack recovery
The price oracle model introduces a price attack recovery mechanism that detects potential market price manipulation events. When a price delta exceeds a given threshold –an indicator of a possible price attack– the new oracle model secures a new reported price. This practice aims to achieve a series of prices that reduce the impact of prices that occurred during the price attack, thereby fortifying the system against sudden price manipulations.
Balancing innovation and cost
While the price oracle model showcases innovation, it also comes with additional processing and storage requirements, leading to higher gas costs. However, Fringe Finance has taken a balanced approach, gradually implementing the new model for assets frequently used by users on the platform. The added cost is warranted for these assets, as a higher number of users rely on their accurate pricing.
Enabling DeFi accessibility for users’ long-tail assets
Fringe’s new oracle model addresses the cost-efficiency and incorporates diverse price sources while minimizing the risk of attacks to the platform. This allows the team to confidently integrate new assets, providing users with the ability to access decentralized lending with assets that previously weren’t integrated into the DeFi ecosystem.
Future considerations: incentivized bots
To further decentralize the platform and improve its censorship resistance, Fringe is considering incentivizing third parties to deploy their own price-updating bots. This would remove Fringe as a dependent party in operating the new price oracle model.
The introduction of Fringe Finance’s new price oracle model demonstrates a significant stride towards improved asset pricing in the DeFi landscape. With its better protection against market manipulations, support for a broader range of assets, and potential for further enhancements, the model is poised to deliver increased value and utility to its users. Few, if any, other lending platforms are applying this level of innovation to their price feeds to best ensure users’ assets are protected. This aligns with Fringe’s mission to further distinguish itself in the DeFi lending and trading platform market.
Fringe Finance. DeFi for everyone.
About Fringe Finance
Fringe Finance is a decentralized money market designed to unlock the capital spread in crypto assets regardless of their capitalization and supported network. With a next-generation DeFi lending & borrowing ecosystem, Fringe aims to unlock the dormant capital from traditional financial markets and all-tier cryptocurrencies.
For more information on Fringe Finance, visit our website.